From the Viewsroom

Death of a ‘rockonomist’

Venky Vembu | Updated on March 19, 2019

Alan Krueger redefined ‘minimum wage’ and made sense of Rajini!

The ‘dismal science’ of economics has been rendered infinitely more dismal by the news of the death of Alan B Krueger, who shaped labour and wage policy in the US and influenced informed public thinking on the subject around the world. It was a pioneering 1992 study by Krueger and his peer David Card that shattered the manufactured consensus among the economic orthodoxy that raising the minimum wage would reduce employment. That study opened up the debate, and influenced policy enough to set a higher benchmark for a living wage.

Although it is Krueger’s work on labour and wages that made the most material difference to policy-making, the Princeton Professor additionally ventured into other fields of economic endeavour that have enriched our understanding of the world. For instance, in a 2003 paper that explored the “causal connection” between education, poverty and terrorism, Krueger (and fellow-researcher Jitka Malečková) concluded that, contrary to conventional opinion, there was no direct connection between poverty and terrorism — and that countries with advanced economies as well as a high degree of civil liberties were more likely to be targets of terrorism.

And along with fellow-Princeton Professor Judd Cramer, Krueger accounted for cab-hailing service Uber’s optimal capacity utilisation — as compared to taxi drivers. Additionally, in collaboration with psychologist-economist Daniel Kahneman and others, he addressed such existential questions as: ‘Would you be happier if you were richer?’ (Short answer: no; subjective well-being is shaped less by income and more by how we spend leisure time, and in fact, the search for higher incomes may cause us to misallocate time to lengthy commutes or to sacrifice leisure time.)

And curiously, Krueger’s exertions in the realm of ‘rockonomics’, the subject of an upcoming book, may even provide the economic rationale for why superstars like Rajinikanth command a premium. That such a Beautiful Mind, given to understanding human well-being at many levels, should have been so cruelly shut down — by suicide — is, ironically, a tragic eventuality that defies any rationale.

Published on March 19, 2019

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